Medigap insurance is private-sector supplemental health insurance that fills in the coverage gaps of Medicare. It is available only to those people who are enrolled in both Part A "hospital insurance" and Part B "medical insurance" of Medicare. Medigap insurance coverage plans are standardized and identified by code letters A through N. Plans identified by a particular code letter always provide the same coverage no matter what company offers the plan. But there are important differences among Medigap insurance providers.
All Medigap insurance providers everywhere must offer the minimum supplemental coverage known as Plan A. According to the Medicare.gov website, this minimum coverage plan pays all Part A hospital expenses and copays for up to 365 additional days of hospitalization after Medicare's Part A hospital benefits cease at 150 days. It doesn't pay the Part A hospital deductible or co-payments during the first 150 days of hospitalization. Plan A pays 100 percent of hospice care expenses. Plan B covers 100 percent of Medicare-approved medical and doctor expenses under Medicare Part A. It also pays for the first three pints of blood per year. When the annual limit on out-of-pocket expenses is reached and the Part B deductible -- which in 2012 is $140 -- has been satisfied, Medigap insurance pays for 100 percent of covered services throughout the remainder of the year.
Insurance companies can offer plans that cover more of what Medicare doesn’t pay for. If they offer anything other than Plan A, says Medicare.gov, they must offer either Plan C or Plan F. Plan C adds to Plan A's benefits the payment of all the Part A hospital deductible. Plan C also adds co-payment coverage of up to $144.50 per day for up to 80 additional days of care in a skilled nursing facility after Part A nursing benefits cease at 20 days. It also pays all the Part B medical deductible, and covers 80 percent of foreign travel emergency care costs above $250. Plan F adds to Plan C's benefits coverage for medical fees that doctors may legally add to Medicare-approved charges. The remaining seven plans vary in the percentages of deductibles and co-payments they will cover and whether foreign care and excess fees are covered.
Literally dozens of national and regional health insurance companies offer medigap policies. Medigap coverage is always the same for any given plan, but not the cost. For example, monthly premiums for the basic Plan A medigap coverage in a particular market can vary by more than 110 percent from insurer to insurer. Some companies may charge different rates depending on your zip code, and may increase your monthly premium as you age. But companies may also offer various price discounts to qualifying buyers.
Companies vary in their coverage of pre-existing conditions. If there is an exclusion for pre-existing conditions, the length of time that exclusion applies will vary from company to company. There also may be a waiting period before any benefits are paid. Companies may offer optional coverage for prescription drugs, vision, hearing and dental services. Some companies affiliated with membership groups may require that you be a member before you can buy a policy. Other variables include whether a company has agents in your area to help with questions, whether it requires referrals for specialist care and whether the company can terminate or refuse to renew your policy for reasons other than nonpayment of premiums.
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